Over 2022, Insignia Ventures has had the privilege of partnering with entrepreneurs for the first time from a diverse array of industries, and we’ve had the privilege of going on call with some of these entrepreneurs on the podcast.
What ties the work of many of these companies Insignia has welcomed this year to its growing community of founders is a focus on sustainability — and while the environment comes to mind, as well as climate tech and green technologies, when it comes to the word “sustainability,” what we’re referring to encompasses a far wider definition.
From enabling the sustainable development of new digital technologies and enterprise digitalization through open finance API “supermarkets”, Web2.5 and Web3 infrastructure platforms, and workflow automation solutions, to unlocking long-term labor sustainability in traditional industries in Indonesia like fisheries and textiles, and even filling in gaps in population sustainability through parenting and early childcare platforms…
Sustainability is all about tapping into the existing momentum of these various aspects of society and building the infrastructure for more long-term value creation.
The reason we’ve decided to cover this in an On Call with Insignia podcast episode is that there are some key patterns we can pick up in terms of where Southeast Asia’s digital economy is headed by revisiting some of these conversations with this context of sustainability.
The first type of sustainability in our lookback on 2022 is that of operational sustainability, specifically referring to platforms and technologies that have emerged to cater to various “revolutions” in digitalization across businesses.
There’s the open finance revolution in Southeast Asia led by Brankas, meeting the trend of the “fintech-ization of everything” as more and more businesses look out to embed financial services in their products and services, regardless if they are fintech businesses or not.
Brankas CEO Todd Schweitzer shared on the first episode of Season 4 back in January what this means in particular for emerging markets like those in Southeast Asia as businesses are now given more accessible pathways to distribute financial services to a wider population.
“So if I were to give a definition of open finance, it is allowing third parties to securely access and provide financial products to the customer. Most banks and especially larger traditional banks are not in the business of building software. They’re in the business of managing risk, managing deposits, loans, and treasury, and following rigorous compliance, and that is what banks do.
Building software is very different from that. It makes logical sense that eventually, you should decouple the bank’s product from where the customer accesses that product. I’m not talking about lead generation, [where you] sign up here, and a customer service rep will call you. I’m talking about actually accessing and using a bank’s product on a third-party app, which could be a fintech, an e-commerce site, or it could be something else, through a piece of software that’s actually designed for me as a customer or for my use case rather than the bank saying we built the thing and you have to use the thing.
That’s I think what’s exciting and that’s particularly relevant in Southeast Asia because you have such an underserved population. A big part of the reason that 50% of Filipinos are unbanked and 40 something percent of Indonesians are unbanked is that the larger institutions have done the math internally, and they say, “There’s not a business case for serving the mass market population or the SME population, especially in Indonesia and the Philippines because they’re island nations.”
So for a bank to serve an island province, that means having not just the branch, but physical cash, staff, internet access, and reliable electricity access. And this all sounds like logistical headaches to a bank and they say, “Ah, well, instead of putting a dollar into acquiring what is basically a poor population in an island province, we might as well just sink it into a corporate lending business here in Metro Manila or in Jakarta.”
So by enabling open finance, you’re changing the economics of serving that population so that it actually becomes, from the bank’s perspective, profitable to serve that population. In fact, they can provide API so that the population can have access to apps or products that are designed for them. And it allows third parties, which could be a smaller bank, a non-bank, or e-wallet, a remittance company, or a non-bank lender to serve that population instead.”
Then there’s the automation revolution, as companies look to reduce spending costs and improve efficiency in back-office operations, a trend that took even greater hold amidst the pandemic and now with market headwinds forcing companies to rethink costs as well.
One of the companies pioneering developments in the automation for business in Southeast Asia is Bluesheets, setting themselves apart as a data processing and workflow automation platform by not only unifying online data pathways but also offline to online pathways, significantly expanding access to such platforms for businesses across the region.
Bluesheets founders CEO Christian Schneider and COO Clare Leighton share on the podcast more about the various “directions” in which their proprietary engine is opening up use cases for businesses to automate the processing of unstructured data.
“Clare: So the bluesheets engine is language and currency agnostic, but of course with that, there are some things more difficult to process than others.
So for us, starting with a specialization in Southeast Asian languages, we’re tackling the biggest problem first. So it gives us a really robust foundation to then scale outward, to international markets and especially other, just English speaking markets, [where] NLP is already pretty well optimized.
To your point around the historic trend of startups starting in Southeast Asia, and then looking outward for opportunities really speaks to the digitization and kind of the speed at which maybe more Western markets have been able to adopt digital technologies and kind of bake that into their everyday stack.
So for us, that’s kind of like a twofold opportunity, the fact that there is less digitization in Southeast Asia. There’s a trend, especially in financial digital transformation. There’s an interest in going digital and we help plug that gap.
So we’re providing the digital workflows and integrations, but we are one of kind of the only solutions that can actually take the offline operation and put it into that online space and help them digitize.
So as we see things like your payment providers, AWS, cloud accounting technology really start massively growing in these markets, more and more businesses are wanting to use these products and they’re moving from a completely offline process to a digital cloud solution — the middle piece of that to help connect it up and then take their offline data and kind of make it digital and make those other cloud solutions accessible.
The other side of that though is that we do of course connect data with integration. So if the data is already online, in those more readily digitized markets, we kind of solve the same use case, the same purpose, and the product functions in much the same way.
We’re just kind of plugging into an online source of data and exporting [it] as we would normally, it’s just a matter of how many input sources [there are]. Are they online? Are they offline? So for us, it doesn’t change too much, but the kind of digitization or lack of digital operation in Southeast Asia is more of an opportunity for us.
Christian: I can only attest to that and also say that the pandemic has been a massive boost for this region to adopt digital, solutions. I think at this point in time will still be a bit more upmarket when it comes to company size whereby the larger players. might have already started these digital transformation initiatives earlier on will now accelerate, which is exactly what we’re seeing, but also it definitely trickles down into the SME segment where we see a lot of growth opportunity, a lot more, I’d say a willingness to automate and therefore eventually, pay for automation as well. and so slowly that educational missing piece is, trickling down into the market. And, I think that’s extremely exciting. And as Clare said, we see two massive opportunities here and we’ll be trying to tap into both of them.”
Finally there’s the web3 revolution, with more operators and businesses looking to unlock value through Web3 products and services, platforms like TripleA have emerged to connect more businesses to cryptocurrency payments. TripleA CEO Eric Barbier shares on our podcast how he got into crypto and what TripleA’s approach has been to really unlock the potential of facilitating transactions for and beyond 300 million cryptocurrency users (at the time of the podcast).
“Eric: I actually bought my first crypto from one of my developers, so that’s how I got to get interested in crypto and then I realized that I had a lot of my clients having a lot of fraud issues with trade gap payments.
So when I discovered crypto, I [thought], “That’s really a perfect solution to help merchants having fraud issues,” because the beauty of crypto is that there’s no risk of fraud. There’s no possibility to do a chargeback.
Linking the two together, I felt that was a very interesting solution to help merchants especially cross-border selling digital goods to be able to have a payment solution without any risk of fraud.
Paulo: Speaking of pain points and the merchants that you guys are helping out with TripleA, maybe you can explain for our listeners who might not be so familiar with how TripleA impacts the user experience of a merchant looking at it from their perspective? Maybe you can give a specific example of a digital transaction that commonly occurs.
Eric: For instance, we’re working with Charles & Keith, which is a Singapore brand but very popular across the world. And so what we’re helping them is that in addition to the traditional payment option, like paying by Grab or by Alipay, and so on, now [they] have a new payment option, which is to pay with your crypto and that’s what we power.
So say you’re buying a pair of shoes for a hundred dollars. What will happen is, [if] you decide to pay with crypto, you will be asked which crypto you want to buy, Bitcoin, for instance, Ethereum, USDC and so on. So you choose the crypto you want to buy with, and then what we do is we are locking the exchange rate for 25 minutes.
So this means that no matter what is the volatility of the crypto, even during the checkout process, the merchant is guaranteed to receive a hundred dollars on their bank account the next day. So we’re completely shielding the merchants from all the issues of crypto, like volatility, security as well as compliance.
So for the merchant, we really act like any of their payment gateways, exactly the same way they would work with a Stripe or somebody like this…and then they get a hundred dollars in their bank account the next day.”
Then there’s also the likes of Headquarters, enabling Web3 businesses to better manage their wallets and finances, as Headquarters CEO Sharon Lourdes Paul shares on a panel discussing the future of driving Web3 mass adoption.
“Just a quick introduction to what Headquarters is about. We are building a dashboard to aggregate common tools, to make it really easy for operators in the scene to be compliant and actually have all their financial workflows in one place. Most importantly, this means their financial reporting will really be at the level of accounting standards.
Because right now, unless they’re a company of a larger size like Crypto.com or at an enterprise level, SMEs in this space can get lost because a lot of them are also first-time operators, first-time founders. I know now the market has slowed down, but during the bull run, what instigated me to start Headquarters was the number of projects that were pushing out, really fast-moving DeFi projects.
Smart contract risk was a top priority, but that means that their back office was a huge mess. Payroll would have been late for all; vendor payments as well were just as chaotic. [Projects would] just pick any wallet [to manage their internal workflows]. Some projects may have used that capital to take care of their personal expenses rather than the company’s. So they are very haphazard, but now that there’s a bear period, people can slow down, and kind of get their back office and SOPs (Standard Operating Procedures) sorted. So we’re just really one of the tools that are helping them.
…Obviously we’re trying to build a lot, but what we are starting off with is, unique to crypto. We’re dealing with many different types of sources of funds.
There’s fiat – which means you’re dealing with a bank account, there are crypto-friendly fintechs – so you could be dealing with a hybrid, and then there is the technologies stack – which means getting integrated. But at the same time, a lot of us are believers of the principle – “not your keys, not your assets”. So we also have funds in our non-custodial crypto wallets. You don’t really access them through APIs, you access them by signing the smart contract.
So it’s pretty troublesome actually when things are not in one place. And that’s where people get lazy and hacks happen or bad actors surface. So we’re really just aggregating different sources of wallets, custodial and non-custodial in one place, bringing all your transactions to one place, and then your records to one place.”
Regardless if it’s through financial services, automation, or Web3, it is clear that platforms that are enabling businesses to operate more sustainably ultimately have second-order and third-order effects in terms of creating more consumer inclusion into financial services, digitalization, and Web3 economies. What’s more is that these platforms introduce greater operational maturity for businesses exploring these new frontiers like automation and Web3, much needed for nascent industries in fast-moving markets…
The second type of sustainability we’re covering is that of labor sustainability, specifically as it relates to improving labor opportunities in fisheries and fashion in Indonesia, two massive and traditional industries plagued by the all-too familiar issues of fragmentation
Platforms like FishLog in fisheries and Wifkain in fashion are building more efficient tools and operational stacks for more players in these industries to emerge and grow by catering to their business needs, whether that involves connecting to more customers or financing for infrastructure and SKUs. Both fisheries and fashion are complex industries with untapped potential, especially in relation to exports, that both platforms have been looking to unlock.
First we have FishLog CEO Bayu Anggara illustrating the market size and pain points of Indonesia’s fisheries industry on our podcast.
“So fisheries contribute around 3 to 4% of the GDP of Indonesia. I think it’s small if you are comparing it to commerce, but if you compare to the food industry, [fisheries] has a good contribution. Livestock is not more than 2%, but if you talk about seafood, because we do a lot of export, we do more than US$6 billion in exports, and we have US$14 billion in captured fish and aquaculture combined.
So I think it’s a very big [industry], to feed the world. And I think we have the third or fourth biggest fish production across the globe. So everyone from the US market, to China and Europe are seeing, Indonesia seafood as a specialty food because we are a tropical [country]. Our [fisheries industry] is very endemic and we have a lot of diversity across the space. So I think that’s the [opportunity] that we can tap into, for the commodity and for the industry.
…if you compare it to the FMCG industry, the seafood industry from both sides, from the supply side, from the demand side, both are fragmented, right? With supply, of course, there are a lot of big companies, but there are also more like small-scale fishermen. We have almost 2 billion small-scale fishermen. So we need to aggregate all of the fish coming together from the supply end.
And then the second one from the demand. There is a B2B market. There is a wet market. There is a modern market. But mostly it’s coming from the wet market because fish is a very cheap protein source if you compare it to meat or chicken. So there is the “bottom of the pyramid” of people who are able to purchase fish better than meat. So that’s why both sides have very fragmented if we talk about the supply chain.
If we talk about seasonality, fish is the most difficult to capture for the inventory. Sometimes, in some area, there’s a lot of fish because it is the [right] season. In another time when [it’s] off-season, the fish [supply] is low and the price [goes] up. It happens almost on a weekly basis or monthly basis. It happens all the time.
When you purchase fish from everywhere across Indonesia, everywhere can be a source [of supply]. Everywhere can be supply side, because food is coming from everywhere, with fish coming from every coastal [town]. Also every coastal [town] can become a demand center. So it is very fragmented.
It is not like a double-sided marketplace [where] you have the supply side and the demand side. It is like a multi-sided marketplace. Suppliers can do transactions with other suppliers. Demand can do a transaction with other demand if they have their inventory and if they can hold their own inventory.
So the goal [for us] is how we can unlock the stock, unlock the inventory, wherever it is, whatever the price, whatever the volume. So when we know the stock at this moment, and then we can deliver to the market that [have] a good price, that’s [builds] sustainability, and then we can capture all of the potential [of the industry]. So that’s why we are starting from the cold storage warehouses because we want to connect the distribution itself.”
Now Sara shares her take on the complexity of the textile and fashion industry in Indonesia, with its strong upstream, fragmented downstream, and Wifkain’s work in the middle.
“The textile industry is very interesting. Indonesia has been one of the strongest manufacturing hubs in Southeast Asia if not in the world. In the textile manufacturing industry, the upstream side has the knowledge, the skill, the network, the resources, the history — it goes a long way in this industry.
But the industry is very opaque and it’s very untransparent. And hence we see that the ecosystem is not integrated from upstream and also downstream and that is what makes the ecosystem not integrated in a holistic way and not optimizing both of the upstream and also the downstream side.
It’s an interesting way to do it, and we looked into the landscape that a very limited number of companies or startups are trying to solve this market practically because of some challenges like localization and also the need to be on the ground, to actually get engaged with the merchants and try to transform them through digitalization, but it’s a necessary thing to do to actually transform the industry from conventional to industry 4.0.
Textile itself is a very different product from all the other generic products like FMCG and everything that currently is being scaled by other startups. I think the complexity and also detailed information in textiles is very, very important, to be captured, for the consumer’s consideration to buy the items as well as for the merchant to actually manage their warehouses.
And that detailed information they’re very different from the generic products and provides a very limited available platform or technology in the market for us to use. And hence the challenge for us was to actually customize and build things that will be used and suitable enough for the merchant and the textile product itself.
The next challenge is the adoption level, because the textile suppliers are very, very, comfortable in terms of the old way of doing business, the conventional way of bookkeeping, recording, and order processing. And it becomes the strategy for us to actually onboard and activate the merchant in a progressive stage.
It’s very difficult to push them to adopt or digitize things from zero to something that is very advanced and hence the strategy will be to get the right, progressive stages, for them to be unlocked into a more advanced feature at the right time and at the right point of the usage behavior as well.
So I think that is most important. The technology itself is the enabler, but the core and also the important [thing], as well as the challenge, is to get that adoption level from the merchant side, looking into their comfort level into the old way of doing it. Once we actually get successful in digitizing them, then hopefully we also get that stickiness in terms of having comfort in using our technology.”
When it comes to leveraging technology for labor sustainability, it is clear that it is less about upending entire processes and value chains, but rather fitting in the status quo in ways that progressively nudge behavior towards greater efficiency.
While the previous two definitions of sustainability have revolved around improving businesses and industries for the long-term, this third definition ties everything together with human capital or population sustainability.
This has been the focus of Tentang Anak, through their work building a platform that serves as a partner to parents throughout the entire childcare journey from pregnancies to early childhood, across various aspects from education to food and finances.
What is interesting about this company is how Tentang Anak represents an evolution in the way technology platforms are being built, leveraging human capital in the form of communities to set up acquisition, retention, and their product roadmap.
Community ultimately played a big role in the company evolving from a parenting education app to launching ecommerce on the app as well.
Founders Dr. Mesty Ariotedjo and Garri Juanda share on the podcast about the role of community in Tentang Anak’s impact in Indonesia.
“Paulo: One thing I was curious about, and this is one of these questions that our audience really loves to hear the answers through is, do you have any interesting stories from any user or customer that you’ve had thus far since you’ve released the app?
Mesty: I’ve heard so much feedback and positive response, especially on the stimulation video tutorials. Actually [the reason] why we made that, since I still do my own practice right now as a pediatrician, so I caught all the [problems] on the field, like what they really want, what they request — “Doctor, please send me the video of how to [know when] a child can walk” or anything else.
So you’d know many parents ask similar things. So I think that’s one way that we can focus on what we want to build for that. I need to make sure that it will help the parents. So maybe parents are very anxious and also stressed about their children’s [diet]; they don’t want to eat and they don’t grow really well. But since Tentang Anak launched, not only a menu, but also [a menu with] nutritional [info that] is created by nutritionists, parents tell us that they are in good hands. And we are very thankful for the feedback.
Garri: So Tentang Anak actually, Paulo, is a very community-driven roadmap company. All of the things that you’ve seen or app is actually [based on] all the things that Mesty’s clients and Mesty’s other [colleagues] clients ask them. So basically they just go to the clinic, and [look], in the past 30 days, what are the most [frequently asked] questions? Mesty brings it home, and together meet with the team, of course, with Mesty [and ask ourselves], how can we scale this? How can we reduce not only the parents’ load, but also the doctor’s load? How can we make this scalable?
So a handful of people can visit a pediatrician whenever they want, but there’s also the rest of the 20, 30 million parents in Indonesia having the same access and the answer that all of Mesty’s clients have as well. It’s really the other way around. So if our users are actually demanding something and we’ve seen a lot of [this feedback], that’s something that we’re instantly building.
So I think we’ve been lucky with that approach so far, and that’s been a good prioritization for the product development as well. And I think we would love to keep it that way and we are very lucky to have more than half a million social media followers. We’re number one in TikTok, the most followed parenting TikTok in Indonesia as well. We have a lot of feedback and we’re very thankful for that. So I think what we need is actually more feedback from our communities.”
Finally, the theme of sustainability is relevant not just as a thesis or framework of looking at how companies are emerging to meet evolving demands in the market but also simply as a mindset of running a business
We had the opportunity to talk on the podcast with Qinggui Huang the CEO of leading Thai online beauty retail platform Konvy about this mindset and how it has enabled them to grow down a path these past ten years that is by all means not unique but stands out when juxtaposed with the venture-backed pathway many are familiar with.
“I’ve been thinking about this question for the last 10 years, right? And I was fortunate that I made right decision. And in the past when investors talked to me asking, are we just gonna stay as a single platform? Is the business trying to build a platform that’s the largest in Thailand or maybe possibly the largest beauty platform in the world?
And I thought about this over and over again, right? I start to realize, right, even platforms like Facebook, even though they are social media platforms, there are times that it ends up that people are moving away from Facebook and they’re moving to Instagram and Instagram being the most popular, and over the last few years they are being taken over by TikTok in just the last one to two years, and have realized that even such big platforms like this that are the number one in the world could eventually be taken over.
And this question comes to my mind is Konvy going to be in the same situation? So I questioned myself, and I came to the realization that the value of Konvy is not that we are the most valuable or biggest platform to be in the market, but the things that we are doing for the consumers and for the brands, that are what our value lies on. And behaviors change like they like to buy in 7/11 in one day, but tomorrow they like to buy in a shopping mall, then people like to buy in shopping malls today, but they might like to buy on ecommerce platforms tomorrow.
And things keep changing, and Konvy has to be in the position where we have to foresee the behavior of consumers and adapt ourselves and be there for the next generations. That’s how I see ourselves.
And the word omnichannel means that Konvy doesn’t have to be just on one platform. Konvy has to innovate to be a platform that the future is going to be. That’s why I’m also trying to foresee, other than social commerce, other than even TikTok that is rising, where is the next platform going to be. And we have to prepare, because, for a lot of these kinds of platforms, you want to get in early.
It is similar to 10 years ago, when there was no e-commerce. I have to try to foresee, and now people are talking about the metaverse and then I have to see if the metaverse is going to be the next big thing for the ecommerce market too. So that actually drives my interest to always be innovating this company as well.”
Sustainability can mean many things but at the heart of it is endurance — enabling the endurance of companies amidst rapid changes in technology and market headwinds, enabling the endurance of industries amidst longstanding inefficiencies, enabling the endurance of lives and families from one generation to the next.
As we look forward to talking to more entrepreneurs in 2023, it will be interesting to see how their companies are expanding the definition of sustainability.
Paulo Joquiño is a writer and content producer for tech companies, and co-author of the book Navigating ASEANnovation. He is currently Editor of Insignia Business Review, the official publication of Insignia Ventures Partners, and senior content strategist for the venture capital firm, where he started right after graduation. As a university student, he took up multiple work opportunities in content and marketing for startups in Asia. These included interning as an associate at G3 Partners, a Seoul-based marketing agency for tech startups, running tech community engagements at coworking space and business community, ASPACE Philippines, and interning at workspace marketplace FlySpaces. He graduated with a BS Management Engineering at Ateneo de Manila University in 2019.